Grants Cut After Government Blunder

The government is being forced to consider cutting student grants after a gross miscalculation of the bill for higher education.

The Department for Innovation, Universities and Skills is understood to be short of more than £100m as a result of last year’s pledge to raise the number of students eligible for government money. The move, which would only affect those studying in England, risks serious criticism from students and universities.

The announcement to boost the number of graduates by widening the availability of grants came only eight days after Gordon Brown became prime minister in July 2007, but a senior Whitehall source said that the plan was not properly costed. Sources have also blamed the “rushed” creation of the Department for Innovation, Universities and Skills – whose annual budget is £17m – for its financial shortage.

The expansion of grants was introduced in September, meaning that students from families with incomes of up to £25,000 were eligible for the maximum grant – a rise from the previous threshold of £17, 500. Universities now face a freeze on student numbers as part of a short-term plan to reign in government spending. The number of students starting university this year in England rose by 10.5%, with the biggest rises among students from poorer socio-economic backgrounds. Ministers were caught out by the steep rise in applications, which put intense pressure on government funds.

A department spokesman said: “The government is fully committed to the expansion of higher education and can ensure finance should not be a barrier to those that want to do a degree.”